To enter a Cancellation of Debt for an Estate or Trust return, enter it as other income on Form 1041 U.S. Income Tax Return for Estates and Trusts, Line 8.

To enter this in TaxAct Form 1041:

1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
2. Click Other Income in the Federal Quick Q&A Topics menu to expand, then click Other miscellaneous income.
3. Continue with the interview process to enter all of the appropriate information.
4. On the screen titled Miscellaneous - Amounts Received, enter a Description, enter the applicable Amount, then click Continue.

Per IRS Instructions for Form 1041 and Schedules A, B, G, J, and K-1, on page 21:

Line 8—Other Income

Enter other items of income not included on lines 1, 2a, and 3 through 7. List the type and amount on an attached schedule if the estate or trust has more than one item.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.